Credit Suisse Group AG saw its shares jump 32% in opening trading Thursday after the bank announced it would borrow up to 50 billion Swiss francs (£44bn) and launch an offer to buy back 3bn Swiss francs worth of its debt in order to strengthen its liquidity.[0] The Swiss National Bank also confirmed that it would provide liquidity to Credit Suisse “against sufficient collateral” if necessary.[1]
The turmoil in the banking sector that has caused volatility on Wall Street was triggered by the failure of Silicon Valley Bank, the second-largest US bank failure ever.[2] This was followed by the closure of Signature Bank by regulators and the wind down of Silvergate Bank, leading investors to brace for a full-blown crisis in the sector.[3]
Credit Suisse’s problems are different to those of Silicon Valley Bank, according to Neil Shearing, chief economist at Capital Economics.[4] He wrote in a note to clients that “they serve as a reminder that as interest rates rise, vulnerabilities are lurking in the financial system. Key areas to monitor are smaller European banks and shadow banks.
0. “Stock Market Today: Credit Suisse Shares Leap; Dow Futures Edge Down” The Wall Street Journal, 16 Mar. 2023, https://www.wsj.com/livecoverage/stock-market-news-today-03-16-2023
1. “Credit Suisse shares surge after bank agrees £44bn lifeline – business live” The Guardian, 16 Mar. 2023, https://www.theguardian.com/business/live/2023/mar/16/credit-suisse-borrowing-liquidity-swiss-francs-central-bank-ecb-lagarde-jeremy-hunt-business-live
2. “Credit Suisse: A Triple Crisis Stock Crash (NYSE:CS)” Seeking Alpha, 15 Mar. 2023, https://seekingalpha.com/article/4587672-credit-suisse-triple-crisis-stock-crash
3. “Credit Suisse just the ‘tip of the iceberg’ amid SVB fiasco: JPMorgan” Markets Insider, 15 Mar. 2023, https://markets.businessinsider.com/news/stocks/svb-bank-crisis-credit-suisse-jpmorgan-stock-market-outlook-contagion-2023-3
4. “Credit Suisse’s $50 billion lifeline calms panic over banks” CNN, 16 Mar. 2023, https://www.cnn.com/2023/03/16/investing/credit-suisse-snb-loan-shares/index.html